Bleak performance and outlook for OCR private home sales

December 2012 saw sales dip with rebound unlikely in 2013.

Of the 1410 private homes sold in December, OCR accounted for 620 units or 44%, said Jones Lang LaSalle, also noting that this is the lowest monthly OCR sales quantum and proportion in 2012. For the first 11 months, OCR sales averaged 1441 units or 75% of the total.

“Looking at the new private residential projects launched in December, Echelon is the largest with 400 units on the market. The rest are small to medium size projects with 19 to 148 units launched for sale. The 1011 private residential units launched in December is the second lowest monthly launch quantum in 2012, after the 773 units launched in November. Of the 1011 units launched, 248 or 25% were from OCR. This is the lowest monthly launch quantum and proportion for OCR in 2012 (average monthly launch and proportion for the preceding 11 months were 1355 units and 66% respectively)," said Mr Ong Teck Hui, National Director, Research & Consultancy, Jones Lang LaSalle.

"Of the 814 units launched in 9 new projects, only 65 units or 8% are in OCR. Besides the December holidays and the hangover from the October measures having an effect, most of the suburban projects are large and launching such projects in the midst of uncertainty is risky. This explains the low level of new launches from OCR in December," Hui said.

"In view of the latest measures imposed on 11 Jan 2013, developers will have to be even more calculated in launching fresh projects in 2013 as setting the right price for launching can be tricky in this uncertain market. With a substantial portion of investment demand stripped out due to the latest measures, sales performance for OCR projects is unlikely to be as buoyant as before," Hui added.

Jones Lang LaSalle said that while 2012 ended as a record year for developer sales with 22289 units sold, the tough new measures in place will curb demand by investors and foreigners substantially by around 30-40% and prices seen to stagnate in the near term.

Here's more data analysis from Jones Lang LaSalle:

The URA monthly sales volume for landed and non-landed private residential units (excluding executive condominiums (ECs)) increased 30% m-o-m from 1,087 units in November to 1,410 units in December.

Take-up rate fell marginally to 140% from 141% in Nov 2012. Out of a total of 1,410 units sold in the month, 449 (32%) were from new launches such as Echelon, Village @ Pasir Panjang and Whitley Residences while the remaining 961 units sold were in previously launched projects such as D’leedon, Eco Sanctuary and Riversails. Anecdotal evidence of festive discounts of between 1 and 5% for some previously launched projects have contributed to stronger activity among projects that were previously launched. Despite the good performance of Echelon which sold 83% of the units launched, the take up rate of the other fresh launches were below 40%.

In the Outside Central Region (OCR), sales were driven mainly by previously launched projects such as Eco Sanctuary and Riversails. The segment saw very little action in freshly launched projects with the best performing strata-landed/non-landed development being Sunny Lodge at Eunos which had a take up rate of 38% or 8 units sold out of 21 launched.

In the Rest of Central Region (RCR), sales were driven, unlike in the OCR, by fresh launches namely Echelon and Village @ Pasir Panjang which sold 331 and 58 units respectively. With Echelon making up 63% of total sales in the segment for December despite a high median selling price ($psf) of 1,768, evidence is strong that the location has strong investor appeal being located near choice schools such as ACS International, NUS High School and numerous retail and leisure amenities such as Holland Village and Orchard Road.

In the Core Central Region (CCR), sales were driven mainly by D’leedon which took up 64% (170 out of 263 units sold) of all sales in the segment. With demand driven possibly by developer discounts such as a 1% discount for buyers living within 1km of their parents, 170 units sold in December 2012 was the second highest since the development was launched for sale, beaten only by 180 units sold in December 2010.